Once again inflation continues to rise and once again more pressure is placed on people's disposable incomes. The higher inflation gets, the worse off people become. With the economy as febrile as it is, the Bank of England won't dare to hike rates to contain rising prices and so we must simply look on, as helpless bystanders.
The MPC is confident inflation will begin to fall back in the not too distant future, but then the MPC's forecasting is hardly the most reliable. To make matters worse, the latest round of QE will almost certainly drive inflation higher. Nobody is sure of the exact fall-out from QE but there are those that argue it will send inflation into double-digit territory. Economically, we are into the unknown.
For the man on the street, inflation is a real concern. With rates low and inflation high, savers and pensioners are being decimated, and have been for a number of years now. Investors and those approaching retirement must do all they can to hedge their capital and income against inflation and prevent it eating into their financial resources. As incongruous as it may sound, there are investment strategies to grow your wealth and protect your income in a high inflation environment.
Those buying an annuity can choose for index-linking or look into an investment-backed annuity. Choosing a fixed income at retirement is a sure way to lose money over the longer term, especially in the current climate.
My comments in this article were quoted here by the Belfast Telegraph.
By David Gibson